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Japan carmakers to cut China production

PETER PARKS/AFP/GettyImages

A Toyota car is seen parked along a street in Shanghai on September 26, 2012. Japanese auto giants Nissan and Toyota are planning to cut production in China because demand for Japanese cars has been hit by the recent diplomatic disagreement over disputed islands.

Japan's carmakers are reporting a huge drop in sales in China, and it's not about China's slowing growth. Anti-Japan protests in China are such an issue, Toyota and Nissan have both cut back on Chinese production.

Purchasing habits are emotional. So emotional scenes like this resonate: A woman screams in anguish, her husband has just been paralyzed by an attacker wielding a bicycle lock at an anti-Japanese protest in the city of Xi'an. His crime? He was driving a Toyota.

The video of this attack spread like wildfire in China before the government took it down, but the message is clear for the Chinese: buy Japanese cars at your own risk. So where will Chinese car consumers turn? "They're more than likely to turn their attention to American products, especially General Motors, but also Ford," says Michael Laske, CEO of AVL China and expert on Asia's auto industry says, "but this could also change if there was ever a dispute between America and China."

Laske thinks falling sales for Japanese cars in China will be short-lived. With President Obama and Republican challenger Mitt Romney battling it out about who can be tougher on China, a potential spike in sales for U.S. carmakers in China may be short-lived, too.